The trial in this matter was
held on September 13, 1993, in Billings, Montana. Petitioner, Russell
Paulsen (claimant), was present and represented by Don Edgar Burris. Respondent,
Entech Incorporated (Entech), was represented by Robert T. O'Leary. Claimant
and Thomas F. Kiely, Jr., were sworn and testified. Exhibit Nos. 1 through
No. 13 were admitted into evidence by agreement of the parties.

The Court has considered the
Pretrial Order, the testimony presented at trial, the
demeanor of the claimant, Mr. Kiely, the exhibits and makes the following:

FINDINGS OF FACT

1. On November 28, 1989, claimant
suffered a back injury in the course and scope of his employment while
operating a scraper.

2. At the time of injury, the
employer, Entech, was self-insured.

3. On or about December 1,
1989, the claimant signed an Employee Confirmation of Work Related Injury.
(Ex. No. 12.) The statement described how the injury occurred in the following
terms:

This has been a gradual
onset from running a scrapper [sic].

Except for the signature and
social security number, the claimant did not fill out the remainder of
the form. However, upon examination of the form, it would not be immediately
apparent to a third party that someone other than claimant had filled
out the form.

4. Following his injury the
claimant was treated by Dana Stokke, D.C. Dr. Stokke first treated claimant
on November 29, 1989. The doctor's notes of that visit describe the circumstances
of petitioner's injury as follows:

"Date of onset was November
28, 1989, at about 6:00 P.M., when he was running a scraper, turned
to the right to look over his shoulder, hit a bump, and he steadily
got worse with aching and burning across low back radiating into right
groin. All activity, such as bending, sitting, lifting, standing, walking,
coughing, sneezing, increases the pain. He has not tried any home treatment.
He has had a previous history of lumbosacral sprain but nothing as severe
as now."

5. Dr. Stokke took claimant
off work on November 29, 1989, but approved his return to work on December
8, 1989. (Ex. No. 5 at 1 and 9.) Claimant has worked continuously since
that time.

6. By letter dated December
27, 1989, Entech denied claimant's workers' compensation claim. The denial
was based on the accident description set forth in the Employee Confirmation.
In the opinion of Thomas F. Kiely, Jr., Entech's director of Benefits
and Claims, the onset of claimant's pain did not meet the injury definition
of the Worker's Compensation Act. The letter stated in relevant part:

Based on the information
you supplied us, we are denying your workers [sic] compensation claim
filed on November 29, 1989.

On the Employee Confirmation
of Work Related Injury form you filled out and signed, you stated the
injury has been a "gradual onset from running a scraper." According
to Section 39-71-119(2) of the Workers [sic] Compensation Act, an injury
is caused by an accident. An accident is defined as "(a) an unexpected
traumatic incident or unusual strain; (b) identifiable by time and
place of occurrence; (c) identifiable by member or part of the body
affected; and (d) caused by a specific event on a single day or during
a single work shift."

In addition, we are denying
this claim as an occupational disease based upon the medical notes provided
by Dr. Dana Stokke.

. . . .

(Ex. No. 10 [emphasis in the
original].)

7. In January, 1990 claimant
retained attorney Geoffrey R. Keller to represent him with regard to his
claim.

8. On January 19, 1990, Mr.
Keller wrote a letter to Entech. He enclosed a request for mediation.
(Ex. No. 3 at 3.) Mr. Keller did not mention the description of the accident
contained in either the Employee Confirmation or Dr. Stokke's report.
He did not mention the mechanism of injury.

9. Mr. Kiely of Entech responded
to the mediation request by pointing out that no demand for settlement
had ever been made.(1) No mediation was
held and nothing further occurred until early 1992.

10. In early 1992 the claimant
hired Don Edgar Burris to represent him. Mr. Burris has vigorously and
effectively represented claimant since that time.

11. Mr. Burris requested and
obtained mediation. The mediator made a recommendation. However, after
receiving no response to the mediation recommendation, on September 30,
1992, Mr. Burris filed a petition on claimant's behalf seeking an adjudication
that claimant suffered an industrial injury. The petition sought an award
of benefits, attorney fees and a penalty.

12. The petition was served
on Entech on October 1, 1992.

13. On October 7, 1992, Entech
accepted liability for the claim and issued two checks, one to Dr. Stokke
for $744.00 in payment for his treatment of claimant (Ex. No. 7) and the
other to claimant for $239.20 of temporary total disability benefits due
him for the days he was off work following the injury (Ex. No. 8.)

14. On July 30, 1993 claimant
filed an amended petition seeking only attorney fees and a penalty.

15. Mr. Kiely testified that
he initially denied claimant's injury claim based on claimant's description
of what occurred (Ex. No. 12 and See F.F. Nos. 3 and 4). In his opinion
the claimant's description did not satisfy the definition of an injury.
(Tr. at 26.) His testimony is consistent with the letter he wrote to claimant
on December 27, 1989, and I find his testimony in this regard credible.

16. It is unclear when Mr.
Kiely first became aware of Dr. Stokke's November 29, 1989 office note
stating that claimant experienced an acute onset of low back pain when
his scraper went over a bump. At hearing he testified that he had "seen
that" (Tr. at 34) but did not recall exactly when. His letter of December
27, 1989, states that he had reviewed "medical notes provided by Dr. Dana
Stokke." (Ex. No. 10.) However, Dr. Stokke's notes for November 29, 1989,
consisted of several pages, and there is insufficient evidence to establish
that Mr. Kiely in fact had the note describing the mechanism of injury.

17. Mr. Kiely testified that
he persisted in denying the claim because of later medical notes of Dr.
Stokke which stated that claimant was suffering from an "Unstable Low
back, secondary to scoliosis and sacralization." (Tr. at 34-6; Ex. No.
5 at 10.) Mr. Kiely testified that based on the note he "figured it was
a hereditary, preexisting condition." (Tr. at 34.)

18. Mr. Kiely testified that
he decided to pay benefits in the late summer of 1992 after conclusion
of the mediation procedure.

19. In its October 13, 1992
response to the claimant's initial petition, Entech sets forth the following
explanation for the delay in accepting liability:

That a mediation conference
was held on March 20, 1992, and the mediator's report and recommendation
was dated June 4, 1992 and received sometime thereafter by the Defendant/Employer.
A copy of the Mediation Report and Recommendation is attached to this
response and identified as Exhibit A. After receiving the mediation
report, the Defendant/Employer's attorney, Robert T. O'Leary, and the
Defendant/Employer's Claim Manager, Tom Kiely, decided to accept the
recommendation of the mediator, but unfortunately, each thought the
other was going to notify the mediator and counsel for the petitioner
of the decision to accept the mediator's report.

(October 13, 1992 Defendant/employer's
Response to Petitioner for Hearing.) The response is deemed a judicial
admission that through inadvertence Entech failed to communicate its acceptance
of liability until several months after its decision to do so.

20. Entech's delay in communicating
its acceptance of the claim and in paying benefits following the mediation
was unreasonable even though inadvertent.

CONCLUSIONS OF LAW

1. This Court has jurisdiction
over this proceeding pursuant to section 39-71-2905, MCA.

2. Benefits are not at issue
in this case. Entech has paid $239.20 in temporary total disability benefits
to claimant and $774.00 in medicals. Claimant is seeking attorney fees
and a penalty with respect to those amounts.

3. Dr. Stokke's report of the
manner in which the injury occurred arguably could have put Entech on
notice of a need to further investigate. However, the evidence fails to
establish that Mr. Kiely had this particular report at the time of the
denial, and it is unclear when he received it. The description of the
accident in the Employee Confirmation provided a reasonable basis for
denial of the claim and there is was no evidence that would show that
Mr. Kiely knew that the description of the accident in the Employee Confirmation
was filled out by someone other than claimant.(2)

The failure of claimant's
original counsel to the press the matter to conclusion contributed to
the delay in resolving this matter.

Although Entech's denial of
the claim was not initially unreasonable, its failure to communicate its
acceptance of the claim following mediation was unreasonable although
inadvertent. The decision to accept was made several months before it
was communicated, and several months before benefits were paid. Nonetheless,
as discussed hereinafter, the unreasonable delay in acceptance and payment
do not entitle claimant to either attorney fees or a penalty.

4. Claimant incorrectly requested
attorney fees and costs pursuant to section 39-71-612, MCA. Section 39-71-612
is applicable when there has been a payment or offer of payment of compensation
and the amount of compensation is in dispute. Section 39-71-611, MCA,
is applicable when the insurer has denied liability or
terminated benefits. Since the dispute in the present case was over liability,
not the amount of compensation, attorney fees and costs would properly
be requested under section 39-71-611, MCA. The Court will treat claimant's
request for attorney fees and costs as a request pursuant to section 39-71-611,
MCA.

39-71-611 Costs
and attorneys' fees payable on denial of claim or termination of benefits
later found compensable. (1) The insurer shall pay reasonable
costs and attorney fees as established by the workers' compensation
court if:

(a) the insurer denies liability
for a claim for compensation or terminates compensation benefits;

(b) the claim is later adjudged
compensable by the workers' compensation court; and

(c) in the case of attorneys'
fees, the workers' compensation court determines that the insurer's
actions in denying liability or terminating benefits were unreasonable.
[Emphasis added.]

Claimant filed his petition
on September 30, 1992. Eight days after the filing of the filing of the
petition, Entech accepted liability and paid benefits, long before the
trial on September 13, 1993. Under these circumstances, the Court is powerless
to award attorney fees whether or not Entech's actions were unreasonable.
See Field v. Sears Roebuck, 50 St. Rptr. 166, 167-68,
847 P.2d 306 (1993); Komeotis v. Williamson Fencing,
232 Mont. 340, 345, 756 P.2d 1153, 1156 (1988).

5. The petitioner is not entitled
to a penalty. Section 39-71-2907, MCA (1989), provides:

39-71-2907. Increase
in award for unreasonable delay or refusal to pay. (1) When
payment of compensation has been unreasonably delayed or refused by
an insurer, either prior or subsequent to the issuance of an order by
the workers' compensation judge granting a claimant compensation benefits,
the full amount of the compensation benefits due a claimant between
the time compensation benefits were delayed or refused and the date
of the order granting a claimant compensation benefits may be increased
by the workers' compensation judge by 20%. The question of unreasonable
delay or refusal shall be determined by the workers' compensation judge,
and such a finding constitutes good cause to rescind, alter, or amend
any order, decision, or award previously made in the cause for the purpose
of making the increase provided herein.

. . .

While the section appears to
require an "order" for benefits as a prerequisite to any penalty, the
Supreme Court in Handlos v. Cyprus Industrial Minerals,
243 Mont. 314, 317, 794 P.2d 702 (1990), found the section to be
ambiguous and construed it to allow imposition of the penalty in cases
where the insurer delays payment until mid-trial. The Court held:

[T]he penalty under sec.
39-71-2907, MCA, is available where an insurer unreasonably delays paying
a claim until the claimant takes the case to trial.
We hold that sec. 39-71-2907, MCA, allows the Workers' Compensation
Court to award a penalty when payment of benefits has been unreasonably
delayed until mid-trial. [Emphasis added.]

The claimant argues that Plooster
v. Pierce Packing, 50 St. Rptr. 59 (1993) applies
in this case. In Plooster the Supreme Court
held that the claimant was entitled to a statutory penalty where eight
days prior to trial the insurer conceded liability for payment of certain
medicines. However, the claim in that case was governed by the 1978 version
of section 39-71-2907, which permitted the award of a penalty where "payment
of compensation has been unreasonably delayed or refused, either prior
or subsequent to the issuance of an award". A 1979 amendment to
the section deleted reference to "issuance of an award" and substituted
"issuance of an order by the workers' compensation judge." In the recent
case of Field v. Sears Roebuck, 50 St. Rptr.
166 (1993), the insurer conceded permanent total disability 25 days
before the trial was to take place. The Supreme Court, applying section
39-71-2907, MCA (1979), held that no penalty could be awarded since "no
award of permanent total disability benefits was made by order of the
Workers' Compensation Court that would serve as a basis for a penalty
under Section 39-71-2907, MCA (1979)." Id.
at 169.

The law in effect at the time
of claimant's injury must be applied. Buckman v. Montana Deaconess
Hospital, 224 Mont. 318, 730 P.2d 380 (1986). Accordingly,
this Court must apply the 1989 version of Section 39-71-2907, MCA. Handlos
and Fieldapply. Since liability was conceded
long prior to trial, the Court is powerless to award a penalty even though
Entech's delay in communicating its acceptance of liability following
mediation was unreasonable.

JUDGMENT

1. This Court has jurisdiction
over this matter pursuant to section 39-71-2905, MCA.

2. The claimant is not entitled
to attorney fees, costs, or a penalty.

3. The JUDGMENT herein is certified
as final for purposes of appeal pursuant to ARM 24.5.348.

4. Any party to this dispute
may have 20 days in which to request a rehearing from these Findings of
Fact and Conclusions of Law and Judgment.

DATED in Helena, Montana,
this 22nd day of February, 1994.

(SEAL)

/s/ Mike
McCarter
JUDGE

c: Mr. Don Edgar Burris
Mr. Robert T. O'Leary

1. 1A
demand for settlement must be made before mediation can take place. Section
39-71-2401(4)(a), MCA.

2. Entech
initially denied the claim because claimant described his injury as "a
gradual onset from running a scraper." In doing so, it relied on the definition
of "injury" in section 39-71-119(2), Section 39-71-119(2) (1989) provides:

(2) An injury is caused
by an accident. An accident is:

(a) an unexpected traumatic
incident or unusual strain;

(b) identifiable by time
and place of occurrence;

(c) identifiable by member
or part of the body affected, and:

(d) caused by a specific
event on a single day or during a single work shift.

Entech could have reasonably
concluded that claimant's description did not meet the injury definition.
Its initial denial was therefore not unreasonable.